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Pure Storage (PSTG) to Post Q4 Earnings: What's in Store?

Zacks Equity Research

Pure Storage Inc. PSTG is set to release fourth-quarter fiscal 2019 earnings on Feb 28.

Notably, the company beat the Zacks Consensus Estimate for earnings in the trailing four quarters, recording average positive surprise of 72.9%.

In the last reported quarter, Pure Storage delivered non-GAAP earnings of 13 cents per share, which surpassed the Zacks Consensus Estimate of 9 cents. The figure also increased on a year-over-year basis.

Total revenues surged 34% from the year-ago quarter’s tally to $372.8 million and beat the Zacks Consensus Estimate of $367 million. Also, the figure outpaced management’s guidance of $361-$369 million.

Robust business fundamentals, strong FlashBlade implementation, higher adoption of new products and strong go-to-market strategies drove year-over-year growth.

What to Expect?

Pure Storage expects fourth-quarter fiscal 2019 revenues in the range of $438-$446 million. The Zacks Consensus Estimate for revenues is pegged at $443.3 million, indicating growth of approximately 31.1% from the year-ago quarter’s figure.

We note that the Zacks Consensus Estimate for earnings has remained stable in the past week. The Zacks Consensus Estimate for the quarter under review is pegged at 18 cents per share, indicating rise of approximately 38.5% from the year-ago quarter’s tally.

For fiscal 2019, management revised anticipated revenues to $1.376-$1.384 billion from the initial range of $1.35-$1.38 billion. The Zacks Consensus Estimate for revenues is pegged at $1.38 billion.

Let’s see how things are shaping up for the upcoming announcement.

Factors Likely to Influence Q4 Results

Pure Storage recently unveiled flash and cloud-based ObjectEngine solution. The latest backup and restore storage solution is designed to enable customers to modernize data protection strategy.

Additionally, ObjectEngine users can access the required data in real time through a faster, secure and cost-effective medium.

The recent buyout of StorReduce is enabling the company to provide enterprises with purpose-built backup appliances (PBBA).

Notably, the acquisition of StorReduce is anticipated to strengthen Pure Storage’s object storage portfolio and bolster the public cloud integrations. The company expects to better manage unstructured data across multi-cloud environments with the buyout.

The company’s newly-launched Pure Storage Cloud Data Services will run on industry-leading cloud platform of Amazon’s Amazon Web Services (“AWS”). The service enables customers to bring storage software directly to cloud platforms.

With the new suite of services, the company attempts to empower customers with flexibility in the data-driven era, wherein enterprise application mobility is vital. Moreover, the cloud data services users can leverage the company’s robust storage capabilities including multi-zone replication, data reduction and snapshots.

Pure Storage is rapidly gaining traction in the flash storage market, which is evident from its expanding customer base. Strength in product portfolio including the likes of FlashArray, FlashStack and FlashBlade business segments is projected to boost the top line.

In the third quarter, the company added more than 300 new customers, taking the total base to 5,450 organizations. Moreover, management is elated on traction witnessed in Global 2000, big government organizations and healthcare companies as well as leading 1000 cloud vendors.

Pure Storage’s notable collaborations with Cisco and NVIDIA among others position its portfolio favorably and aid it to expand business.

Cisco’s tie-up with the company’s FlashStack has significantly accelerated overall converged infrastructure and integrated systems markets. The company strengthened its partnership with NVIDIA, a dominant player in AI related computation, to widen product menu. The company has released AI-ready infrastructure or AIRI in collaboration with NVIDIA.

Notably, Pure Storage’s robust business fundamentals and strong go-to-market strategies deserve a special mention in this regard.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Meanwhile, the Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

Pure Storagesports a Zacks Rank #1 and has Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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Here are some companies, which, per our model, have the right combination of elements to beat estimates in their upcoming releases.

Live Nation Entertainment, Inc LYV has an Earnings ESP of +2.41% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square, Inc SQ has Earnings ESP of +5.95% and a Zacks Rank #2.

AMC Entertainment Holdings, Inc AMC has Earnings ESP of +37.68% and a Zacks Rank #3.

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